Beginner · Mutual funds
Mutual Funds and SIP
What a mutual fund is, open-end and closed-end funds, NAV, monthly SIP and how to choose a fund.
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1. What is a mutual fund?
A mutual fund (म्युचुअल फण्ड) collects money from many investors and invests it in many shares, bonds and deposits. A licensed fund manager chooses the investments, and you own units of the fund.
Instead of buying 15 different shares yourself, one fund unit gives you a small piece of all of them. This spreads your risk.
2. Open-end and closed-end funds
| Open-end fund | Closed-end fund | |
|---|---|---|
| How you buy | Directly from the fund manager (office or online), any working day | IPO at Rs. 10 per unit (min 100 units), then on NEPSE through your broker |
| Price | The fund's NAV (with any entry/exit charge stated by the fund) | Market price on NEPSE, which can be above or below NAV |
| Selling | Back to the fund manager at NAV | On NEPSE, like a share |
| Term | No end date | Fixed term of several years (often 7 to 10), then paid out |
| Monthly investing (SIP) | Many open-end funds offer SIP | No; buy on the market |
4. SIP: investing a little every month
A SIP (Systematic Investment Plan) invests a fixed amount every month into an open-end fund. You buy more units when prices are low and fewer when high, and you build the habit of saving.
- Choose a fund and its SIP plan on the fund manager's website or office.
- Set the monthly amount and the bank account to debit (the minimum depends on the fund).
- Keep going for years; stopping during a falling market misses the cheap months.
5. How to choose a fund
- Type: equity funds (mostly shares, higher risk) or debt funds (mostly bonds and deposits, lower risk).
- Track record: compare returns over 3 to 5 years, not one good year.
- Costs: check the management fee and any entry or exit charges in the offer document.
- Manager: funds are run by SEBON-licensed fund managers (usually bank subsidiaries).
Mutual funds can also lose value. They spread risk; they don't remove it.
Rules and rates checked October 2026. They change from time to time; confirm with your broker, your DP or SEBON before acting.